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Free data plans like T-Mobile’s Binge On let consumers stream internet video without counting their data usage toward monthly caps. The Federal Communications Commission has recognized these plans can benefit consumers and competition. What’s not to like about free data?

According to the lame duck FCC, the answer depends on who’s offering it. The FCC’s outgoing chairman said T-Mobile’s Binge On service is pro-competitive and pro-innovation. According to a recent FCC letter, however, it’s “anticompetitive” when AT&T gives free data to its mobile customers who subscribe to DirecTV’s streaming video service. That’s par for the course with the current FCC, which is more interested in picking industry’s winners and losers than protecting consumers.

That appears to be what the FCC is doing in this case. The agency’s letter acknowledges that AT&T offers the same payment terms to all companies that want to take advantage of free data services. AT&T doesn’t treat DirecTV any differently than it treats Netflix, Hulu, or any other video streaming provider. Read More

Haymarket, VA, September 29, 2016 – Fred Campbell, director of Tech Knowledge, issued the following statement regarding the decision of the Federal Communications Commission to remove its planned vote on a set-top box order from today’s open meeting agenda:

“Over the last several weeks, it has become increasingly clear that FCC chairman Tom Wheeler’s most recent iteration of his revised proposal to regulate set-top boxes looks nothing like the proposal the agency released for public comment earlier this year. Especially in light of the obvious lack of consensus among the agency’s commissioners, the public interest would be best served by providing the public with notice of how the revised plan is expected to work and a reasonable opportunity to comment on it.

A decision that could determine the future of television shouldn’t be cloaked in secrecy. It should be decided through a transparent and open process that reflects the complexity and importance of this proceeding.”

Tech Knowledge promotes market-oriented technology policies on behalf of the public interest. Additional information about Tech Knowledge can be found on our website, techknowledge.center.

Yesterday Tech Knowledge filed ex parte letters in the FCC’s ‘Unlock The Box’ proceeding that summarize the legal infirmities of the agency’s proposal to regulate set-top boxes. The letters conclude the FCC’s plan is doomed to fail in a legal challenge because:

The FCC plan would require MVPDs to offer their video services for resale by third-parties on a common carriage basis in violation of sections 542(c) and 153(11) of the Communications Act, which expressly prohibit the FCC from regulating MVPDs as common carriers.

The FCC plan would violate MVPDs’ First Amendment rights by restricting their editorial discretion in a manner that cannot be justified under intermediate or strict scrutiny.

The video interface between consumers and MVPD programming is itself core speech that is entitled to strict First Amendment scrutiny; and even if the video interface were not considered core speech in and of itself, an MVPD’s interface would still be entitled to First Amendment protection due to its close nexus to an MVPD’s exercise of editorial discretion with respect to its underlying video programming.

The FCC’s competitive justification for abridging MVPDs’ First Amendment rights is insufficient to demonstrate harm justifying the elimination of editorial discretion by a particular class of the press because the FCC has already found the market for MVPD services (which necessarily encompasses navigation devices) effectively competitive. The First Amendment requires the FCC to “explain[] why, in the pursuit of diversity, the independence of competing vertically integrated MVPDs is inferior to the independence of unaffiliated [navigation device companies].” Time Warner Entm’t Co., L.P. v. F.C.C., 240 F.3d 1126, 1139 (D.C. Cir. 2001).

The plan also burdens far more speech than necessary to remedy whatever competitive issues might exist with respect to navigation devices, because there are readily-available alternatives that would eliminate any need for a separate navigation device (or separate navigation software) without abrogating MVPDs’ editorial discretion (e.g., the app-based proposal).

Shifting control over the video interface from MVPDs to Internet software companies would threaten the free flow of information and ideas by concentrating control over the video interface in the hands of a few, giant Internet software companies. Internet software companies would have the same incentives as MVPDs to influence consumer behavior in the video marketplace but would have far greater ability to do so than MVPDs, because the largest Internet software companies (1) have greater scale and ability to reach consumers than MVPDs, but (2) would not be subject to the FCC’s regulatory constraints on MVPD market structure or public interest obligations (e.g., political advertising disclosures).

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On Monday, Tech Knowledge filed the following reply comments at the Federal Communications Commission in its proceeding to impose wholesale unbundling regulations on cable and satellite video programming in the guise of regulating set-top boxes. The complete comments as filed can be downloaded from the FCC’s website in PDF format HERE. (Note, the HTLM version of the reply comments printed below does not contain the footnotes or appendices provided in the PDF version that was filed at the FCC.)

Executive Summary

The arguments made by proponents of the Wholesale Proposal affirm that its true purpose is to limit MVPDs’ ability to exercise editorial discretion by forcibly overwriting MVPDs’ video interfaces. The Communications Act, previous FCC findings, judicial precedent, and scientific studies in behavioral economics all demonstrate that the interface between consumers and MVPDs’ video programing is itself a form of speech or is otherwise entitled to First Amendment protection because it is intrinsic to MVPDs’ exercise of editorial discretion.

Consider Amazon’s example in its comments in this proceeding — that the Wholesale Proposal would enable Amazon to suggest that an MVPD subscriber watch Amazon’s own programming rather than an MVPDs’ program. In the context of the printed news, that would be equivalent to a rule permitting the Washington Post (a newspaper owned by Amazon CEO Jeffrey P. Bezos) to slap a new front page on the Washington Examiner that contains the Post’s chosen headlines and a message directing Examiner subscribers to read the Post instead. Though the Examiner’s subscribers would still have access to the Examiner’s content as a technical matter (by turning the page), the rule would have the effect of compelling the Examiner to publish (or subsidize the publishing of) that which it does not want to publish (the Post’s headlines and advertising messages) while effectively overriding the Examiner’s editorial decisions about what should be considered the “front page news” of the day. Similarly, the Wholesale Proposal would force MVPDs to publish that which they do not want to publish (i.e., mandatory “information flows”) in order to enable third-parties to direct MVPD subscribers to watch third-party programming (and its associated advertising) that displaces MVPDs’ own decisions regarding what programming should be highlighted on the video interface’s “front page.” Whether applied to print or video, such a rule would cut straight through the heart of the First Amendment’s guarantee of press freedom.

Shifting control over the video choice architecture (and corresponding profits) from MVPDs (and the video programming vendors with whom they negotiate content licenses) to Internet software companies (and their affiliated video programming vendors) would threaten the free flow of information and ideas by concentrating control over the video interface in the hands of a few, giant Internet software companies. Read More

While defending his decision to take jurisdiction over broadband privacy issues from another federal agency, Federal Communications Commission Chairman Tom Wheeler proclaimed the FCC “didn’t just fall off the turnip truck.” Perhaps because he had already driven it into the ditch. With this Chairman at the wheel of the FCC, the nation’s expert agency in charge of regulating the Internet, the agency can’t even keep track of public comments filed over the Internet.

During its net neutrality proceeding in 2014, the FCC omitted nearly 680,000 comments from its initial data files due to “glitches” in its electronic comment system. As quickly as the FCC is rushing to impose new regulations on Internet privacy and Internet video, one would think the FCC would have solved its problems with receiving public input by now.

Instead, it appears things have gotten worse. Comments aren’t even showing up in the FCC’s electronic system due to a “74,000-comment backup” across all FCC dockets. In the meantime, the public can’t see these comments or attempt to respond to them. If Senator Mike Lee hadn’t asked Chairman Wheeler about the FCC’s information technology problems during a hearing on Wednesday, the public likely wouldn’t have known that the FCC comment systems aren’t working properly. Read More

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Today Tech Knowledge filed the following comments at the Federal Communications Commission that address an FCC proposal to force MVPDs to offer unbundled wholesale services in the guise of creating competition in the artificial market for set-top boxes (a proposal dubbed Unlock the Box by FCC Chairman Tom Wheeler). The complete comments as filed can be downloaded in PDF format HERE. (Note, the HTLM version of the comments printed below does not contain the footnotes provided in the PDF version available at the link above and filed at the FCC.)

Executive Summary

The Wholesale Proposal Is an Impermissible Common Carriage Requirement

The FCC’s proposed regulations (the “Wholesale Proposal”) would do more than merely create competition in a market for the “equipment” used to access MVPD services that is artificially separated from the underlying MVPD services themselves; the proposed rules would effectively require MVPDs to provide unbundled, nondiscriminatory access to video programming “information flows” that are an essential part of otherwise fully integrated MVPD services. The avowed purpose of the Wholesale Proposal is to enable third parties to combine MVPD’s unbundled programming with “ancillary features” to provide entirely new, “differentiated” services in competition with MVPDs’ underlying services — the same justification that has traditionally been used to impose resale and other wholesale obligations on common carriers under Title II. The FCC cannot accomplish this result in the guise of promoting competition in an artificially created market for “equipment,” because mandatory wholesale requirements are fundamentally common carriage, and the Communications Act prohibits the FCC from treating MVPDs as common carriers. Read More

Haymarket, VA, March 25, 2016 – Fred Campbell, director of Tech Knowledge, issued the following statement regarding Netflix’s admission that its been secretly throttling its wireless video traffic on a discriminatory basis:

“When I first raised concerns about Netflix’s cynical manipulation of Internet traffic flows in this analysis, I thought the FCC would ask Netflix some questions like these. Instead, it was a Canadian regulator who used language from my initial analysis (in this hearing) to ask Netflix whether it was throttling traffic to aid its net neutrality lobbying efforts, and Netflix’s director of global public policy who said, ‘The allegations that we slowed our traffic or otherwise [are] responsible for degrading users’ service are categorically untrue.’

Yesterday, however, staff at the Wall Street Journal reported that Netflix now admits that it has been secretly throttling its video traffic for more than five years in a manner that is patently discriminatory.

Make no mistake, the importance of this revelation for U.S. Internet policy goes well beyond Netflix and the all-too-common practice of corporate hypocrisy in Washington. Policymakers in the U.S. have systematically excluded Netflix and all other “over-the-top” companies from Internet, privacy, and video regulations that would otherwise apply based on the presumption that over-the-top companies lack the incentive or ability to engage in discriminatory or anticompetitive behavior that could harm consumers or competition. Netflix just proved that presumption is dead wrong.

The public policies that govern communications systems should be purposeful, not haphazard. They should be applied in a way that’s even-handed, not in a way that treats one set of industry participants better than another. They should be based on credible, reliable data, not anecdotal evidence offered by large corporations seeking government favors. And when there are credible allegations that a company has secretly engaged in practices that have been deemed harmful to consumers and competition, policymakers should investigate those allegations in good faith, not ignore them.

Now that Netflix has finally admitted the truth, Congress, the FCC, and the FTC should fully investigate Netflix’s secret and discriminatory throttling practices.”

Tech Knowledge promotes market-oriented technology policies on behalf of the public interest. Additional information about Tech Knowledge can be found on our website, techknowledge.center.

Haymarket, VA, February 18, 2016 – Fred Campbell, Director of Tech Knowledge, released the following statement with respect to the Federal Communications Commission’s adoption at its February open meeting of a proposal to modify regulations governing cable and satellite set-top boxes:

The slogan for today’s FCC meeting, “Unlock The Box,” isn’t about unlocking cable and satellite set-top boxes. It’s about shifting some of the value of their underlying programming rights to Google and other powerful Internet companies.

In the STELA Reauthorization (STELAR) Act of 2014, Congress charged the FCC with establishing a working group of technical experts to recommend standards for promoting the “competitive availability of navigation devices,” not search engines and programming guides. But promoting Google’s ability to add cable and satellite programming packages to its online monopoly search engine and to create Google-branded programming guides is what the FCC’s proposed plan would ultimately do. The plan would allow Google to rebrand other video service providers’s programming packages as Google’s own and permit Google to track the behavior of video consumers in order to enhance Google’s advertising and other affiliated businesses.

The expert group established by the FCC at Congress’s behest recommended two different approaches — the approach proposed by the FCC today as well as an apps-based approach that would promote the competitive availability of navigation devices without compromising the value of existing programming packages or the contractual rights of programmers. But the fact sheet released by Chairman Wheeler in January didn’t mention the expert committee’s apps-based recommendation. The fact sheet informed the public about the Chairman’s preferred plan only, as if the only choice were between his plan or nothing at all.

Operating a government agency in this sort of shade does not serve the public interest. The public deserved to know about both options before editorial staffs around the nation began proclaiming their support for the only option the Chairman chose to present.

Tech Knowledge promotes market-oriented technology policies on behalf of the public interest. Additional information about Tech Knowledge can be found on its website, tech knowledge.center.

“Today, we celebrate the first glorious anniversary of the Information Purification Directives. We have created, for the first time in all history, a garden of pure ideology—where each worker may bloom, secure from the pests purveying contradictory truths. Our Unification of Thoughts is more powerful a weapon than any fleet or army on earth. We are one people, with one will, one resolve, one cause. Our enemies shall talk themselves to death, and we will bury them with their own confusion. We shall prevail!”Apple advertisement, 1984.

The pests of reality’s contradictory truths threw the first hammer at the ideological Internet on Monday, when the Wall Street Journal reported that HBO, Showtime, and Sony Corp. want to stream their Web-TV content separately from the “public Internet.” They fear Internet congestion will only get worse as viewers stream more video content and they don’t want to offer consumers a frustrating experience. So they are talking with major broadband providers about having their streaming services treated as managed services that would give consumers the best experience possible. Read More

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I’m inclined to side with Representative Bobby Rush, who is optimistic that the trend will positively impact the video marketplace while remaining mindful that it’s too soon to predict the ultimate fate of à la carte video streaming.

No matter how these services fare among consumers, however, the fact that a cable channel (HBO), a broadcast network (CBS), and a major movie studio (Lionsgate) have all chosen to experiment with a new distribution model offers valuable insight to policymakers. Read More